Correlation Between American Express and Allianzim Large

Can any of the company-specific risk be diversified away by investing in both American Express and Allianzim Large at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining American Express and Allianzim Large into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between American Express and Allianzim Large Cap, you can compare the effects of market volatilities on American Express and Allianzim Large and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in American Express with a short position of Allianzim Large. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Express and Allianzim Large.

Diversification Opportunities for American Express and Allianzim Large

0.95

Correlation Coefficient

American Express  Allianzim Large

Almost no diversification

The 3 months correlation between American and Allianzim is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding American Express and Allianzim Large Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Allianzim Large Cap and American Express is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on American Express are associated (or correlated) with Allianzim Large. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Allianzim Large Cap has no effect on the direction of American Express i.e., American Express and Allianzim Large go up and down completely randomly.

Pair Corralation between American Express and Allianzim Large

Considering the 90-day investment horizon American Express is expected to generate 5.3 times more return on investment than Allianzim Large. However, American Express is 5.3 times more volatile than Allianzim Large Cap. It trades about 0.28 of its potential returns per unit of risk. Allianzim Large Cap is currently generating about 0.43 per unit of risk. If you would invest  27,019  in American Express on September 4, 2024 and sell it today you would earn a total of  3,207  from holding American Express or generate 11.87% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	100.0%
Values	Daily Returns

American Express  vs.  Allianzim Large Cap

American Express

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in American Express are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Even with relatively unfluctuating basic indicators, American Express reported solid returns over the last few months and may actually be approaching a breakup point.

Allianzim Large Cap

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Allianzim Large Cap are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Allianzim Large is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with American Express and Allianzim Large

The main advantage of trading using opposite American Express and Allianzim Large positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Express position performs unexpectedly, Allianzim Large can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Allianzim Large will offset losses from the drop in Allianzim Large's long position.

The idea behind American Express and Allianzim Large Cap pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

Check out your portfolio center.

Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.